The 0.3pc rise over the last month was driven by a boost to London house prices, with concerns over the crisis in Cyprus and the eurozone likely to send more cash into the capital in coming months, the study said.

Prices soared by 0.7pc month-on-month in London, showing the strongest uplift since February 2010. Across the rest of England and Wales, prices rose in a fifth of postcodes – the highest share in three years.

The North East was the only region to see house prices fall month-on-month, recording a 0.1pc slide. The national increase this month marks the highest growth seen since March 2010.

Lenders and estate agents have been reporting activity uplifts, with mortgage availability increasing and loan rates slashed since the Government launched its Funding for Lending scheme.

Richard Donnell, director of research at Hometrack, said a lack of homes on the market has also been key to supporting prices.

“The general improvement in market sentiment on the back of rising prices will be welcomed across the housing industry,” he said. “However, while scarcity of homes, support for lending and new housing will all act as a support to pricing levels, the problems of affordability and deposit levels remain impediments to a full-blown market recovery.”